UPDATE 1-Spain to issue first 30-year benchmark bond since 2009
By John Geddie
LONDON, Oct 8 (IFR) - The Kingdom of Spain is set to issue its first new bond with a maturity of over 30-years since 2009 on Wednesday, a bank mandated on the deal said on Tuesday.
Spain, rated Baa3/BBB-/BBB/A(low), on Tuesday hired Barclays, BBVA, BNP Paribas, CaixaBank, Citigroup and Santander GBM to manage the sale by syndication of a new bond maturing on October 31 2044.
The deal is expected to come to market tomorrow, coinciding with Italy's first ever sale of a new seven-year bond.
Spain launched a new 15-year bond via syndication in July, raising EUR3.5bn via the 5.15% October 2028 issue, and also issued two new 10-year bonds earlier this year, raising EUR7bn on both occasions.
Following the 15-year sale in July, Pablo de Ramón-Laca Clausen, senior adviser for funding and debt management at the Spanish treasury, said Spain had plans to issue a new 30-year benchmark in the medium term.
It last issued a new 30-year back in September 2009, a EUR4.5bn 4.7% July 2041 Bono, but tapped that deal, and its 4.9% July 2040 bond, at a special auction in March.
The July 2041 issue was bid at mid-swaps plus 239bp, equivalent to a yield of 5.102%, shortly after the new deal was announced.
When Spain last issued a new 30-year bond it was rated Aaa/AA+/AAA by all three main credit agencies. However, a downturn in its economy coupled with a severe banking crisis has since eroded this rating.
The country's borrowing costs spiked in the summer of 2012 sparking bailout fears, but they were largely quelled by a pledge from European Central Bank President Mario Draghi to protect the euro at all costs.
This year, improved economic performance and bond yields which have hit levels not seen since 2008 show signs that the fragile economy is on the road to recovery.
As a result, Spain is also planning to issue a 50-year bond, its longest ever, in coming months, an Economy Ministry source told Reuters last month. (Reporting by John Geddie, editing by Julian Baker)
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